CREJ - Property Management Quarterly - January 2017
Dynamic property managers are the ones who can identify unique opportunities to reduce the owner’s bottom line while simultaneously giving tenants good reasons to stay. Hidden in the shadows of opportunities to greatly reduce costs while beautifying a property lies lightemitting diode lighting conversion. Right now, and it won’t last forever, changing out incandescent and compact fluorescent lamp bulbs to LED is an overlooked investment opportunity that accomplishes those hard to find opportunities. In fact, the incentives offered by energy companies to make the move to LED are so profitable that some tenants are choosing to split or cover the entire cost of the conversion. Managed properties have an available operating budget, which often includes working capital for improvements and deferred maintenance. LED doesn’t just reduce an energy bill after you put it in. It has an impact on line items in the budget, which include hundreds, sometimes thousands of purchased light bulbs and labor costs to replace burnt-out bulbs with other low-efficiency bulb that will burn out again in a few years. I have dug into those expenses for large facilities and just those replacement costs, excluding the energy consumption cost, can run into the tens of thousands per year. Current efficient LED bulbs can last at least 50,000 hours and some are improving to 100,00 hours. On a conservative average use that is 20 years. The budgetary line items containing those costs are not just reduced but virtually eliminated, immediately increasing the cash flow of the property. LED also puts off significantly less heat, and since heating costs much less than cooling, the energy savings extends to the reduced cost of air-conditioning in the warmer months. You will be green not just from a sustainability standpoint, but also from a cash point of view. LED is the most practical, economical, efficient and longest-lasting manmade light. You do not have to take my word for it, but I can give you some pretty good indicators that LED is here to stay. Union Station, Colorado Convention Center, Denver Pavilions and Denver International Airport are just a few examples of local facilities that are making the move to LED and benefiting from the available rebates and energy savings. Right now energy companies coupled with sustainability initiatives are mandated to financially incentivize properties make the transition to LED. We are being pushed by “the powers that be” to change all our lights to LED. The push comes with free money in the form of rebates. Once enough properties move to LED, these compelling incentives will cease to exist. If you are going to make the move to LED, I would recommend letting Xcel and our other public and private partnerships help you pay for it now. The incentives that are available are not just a little bit of free money. We are seeing rebate checks back to companies that choose to change out their lighting to LED up 47 percent of gross project costs. When designed correctly, we see return on investments of as little as 1.04 years and continuous savings of 50 percent less on the cost of lighting energy. This real money goes straight back into the pockets of the facility owners or tenants. An LED upgrade does not have to be part of a larger remodel and, with the right partner, can be done quickly and effortlessly. There is quite a bit of research on which color temperature and color rendering is best for different areas and rooms. An LED expert can make sure you are getting the right light for each application. It may be helpful to know LED can be added to a refurbish project as a trigger point if a certain return on investment is required for various sustainability financing, such as Commercial Property Assessed Clean Energy. Striking the balance between cost and value, the time really is right now. I have been in this industry for a long time, and I am clear we’ve reached a perfect trifecta of a stable technology, an active rebate program that will only be around a limited time, and significant energy savings realized immediately. This is one of those decisions where the interest of all parties can align and it can be an easy win for the owner, the property manager and the tenant. I am confident that if you take a closer look, it won’t be hard to illuminate others about this opportunity. I highly recommend getting a lighting assessment to put you on the path to a brighter future.